There are obvious reasons why CFOs should fully support IoT projects in their companies. Reduction of costs, increased cash flow and predictability are at the top of the list, yet there are other reasons which are not so obvious, but are of equal importance for the CFO.
New service offerings provide predictability and steady revenue streams; selling widgets (requiring capital expenditure from the client) can now be provided as a service with a recurring revenue stream and be removed from the balance sheet as an operating expense. Transforming to new business models has been extremely profitable and a game changer for many companies with successful IoT projects.
Another key point is asset tracking; global shipping companies, for example, spend millions on pallets. Since they often don’t know where all pallets are, they can’t show them as an accountable asset on their balance sheet. But what if they could track the location of the hundreds of thousands (or even millions) spread worldwide? And what if it didn’t cost that much? The CFO could account for the assets on the balance sheet and depreciate them accordingly. This is just one IoT example in an industry that has applications and opportunities for many other IoT cases.
Chargebacks and costs allocations
CFOs of multinationals have struggled for years with cost chargeback requirements and allocations; monitoring traditional IT costs is possible with software systems that break down usage in order to allocate the exact cost per CPU, user, etc.
However, local subsidiaries with their own P&L are not normally keen to have their IT, infrastructure, and connectivity costs allocated equally per country. Why should, for example, a local operative in Belize pay the same as one in Brazil?
Communications and connectivity services are different to IT infrastructure and systems; from experience, I have seen invoices from Telcos to large enterprise clients containing more than 20,000 pages in one invoice. This is a nightmare to verify and companies hate it; they are difficult to understand and cumbersome to manage. Chargebacks for connectivity and communications services are a different ball game!
Large Telcos and global companies struggle with billing issues – disputes and credits from disputed invoicing are common.
However, new IoT analytics and orchestration systems are launching with capabilities which add value, making CFOs and their local operations controllers very happy indeed.
In a simple interface a client can drill down per country and per device, allocating and accounting for usage down to the minute. This is a welcome relief for CFOs, as chargebacks and cost allocations will be possible, in addition to having complete visibility, predictability and control of their global business.
So, dear CFOs – don’t miss out on the opportunity to get behind your IoT Project. You can rest assured that a properly executed IoT strategy, with the right partners advising you, will be a very welcomed and successful initiative for you. Just make sure to get access to the correct partner ecosystem and find a connectivity orchestrator, with a high level of automation, security, and enablement to connect devices in a controlled, efficient and effective manner.